Here's How Much The NBN Is Really Costing The Government

Today the Parliamentary Budget Office released a report showing exactly how much money the Australian Government has already invested into NBN Co, and how much it is expected to cost over the next 10 years.

Including details on a recent $19.5 billion loan, which was given despite an existing government investment of $20.3 billion, and the existance of an investment cap of $29.5 billion, the report says rollout is due for competition in 2020, at a total cost of $49 billion.

By June this year the Government had given $20.3 billion to NBN Co, but the Government's equity in the company was only $13.1 billion.

The $7.2 billion deterioration is "principally due to NBN Co accumulating losses totalling $8.3 billion", the report reveals, stating the losses "reflect the early years" of the NBN rollout.

The details about the annual costs are particularly interesting.

The annual cost to the budget of the Government's investment in the NBN is estimated at around $580 million in 2016–17.

Following the final drawdown of the $29.5 billion in equity and assuming the loan is drawn down from 2017–18 and paid back in full in 2020–21, the annual cost is estimated to rise to over $730 million in 2019-20 and to $2.1 billion by 2026–27.

Public debt interest payments on the money put into NBN by the Government is identified as the "key driver" of the annual cost, although the loan provided to NBN Co has an interest rate higher than usual, giving a "partial offset" to the annual cost.

"The final cost of the Commonwealth's financing of NBN Co will not be known until NBN Co is privatised and the market places a value on the NBN," the report says. "Until then the Commonwealth will continue to bear an annual cost associated with its financing of NBN Co."

The report goes on to say that if the sale price of NBN Co is less than the cost of financing NBN Co, then the NBN would have "an enduring cost to the budget".

There is also a small risk (less than five per cent chance) that the Government could be forced to meet "contingent liabilities" in relation to the NBN rollout, totalling an amount of $15.5 billion as at 30 June 2016.

Trending Stories Right Now

Sonos has been the leader in delivering great audio around the home for some time. And there probably aren't that many homes without at least some IKEA furniture. Now, the two market leaders are joining forces to bring the Symfonisk smart speaker range to us. The Symfonisk line of smart speakers will be fully compatible with Sonos’ existing products and Ikea’s Home Smart line of of power outlets, lights, and window shades.